Tata Steel assures 12.27 pct equity for Bhushan Steel creditors

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New Delhi | Published: April 3, 2018 4:19:53 AM

The RP’s counsel urged the NCLT to accept the proposal as 99.9% of the creditors have voted in favour of Tata Steel’s proposal.

steel, steel industry, jsw steel economyJSW Steel had also submitted bid for Bhushan Steel, but its bid was worth Rs 27,000 crore.

Apart from offering to pay Rs 36,400 crore to Bhushan Steel’s financial and operational creditors, Tata Steel has also assured financial creditors 12.27% equity in the debt-ridden 5.6-MTPA steel firm promoted by the Singal family.
As per Tata Steel’s resolution plan submitted last week in the National Company Taw Tribunal (NCLT), the company will pay upfront the financial creditors Rs 35,200 crore and Rs 1,200 crore to its operational creditors over a period of one year. The troubled firm owes Rs 56,080 crore to its financial creditors and Rs 3,488 crore to operational creditors.

Elaborating the resolution plant, resolution professional’s counsel Ravi Kadam told NCLT on Monday that Tata Steel would also pay Rs 27 lakh to Bhushan Steel’s employees and will pay any employees’ due, which might come up in future.
Post-acquisition, Tata Steel will retain all its 353 employees and ring in funds as and when required to run the acquired company.

The RP’s counsel urged the two-member principal bench of NCLT, headed by its president justice MM Kumar, to accept the proposal as 99.9% of the creditors have voted in favour of the Tata Steel’s proposal.
However, Bhushan Steel’s employees have moved to the tribunal alleging that the Tata Steel is not qualified to bid under section 29 (A) of the Insolvency and Bankruptcy Code and thus, the decision of the Committee of Creditors (CoC) was not an informed one. The matter is scheduled to be heard on Tuesday.

JSW Steel had also submitted bid for Bhushan Steel, but its bid was worth Rs 27,000 crore.

Analysts said although Tata Steel’s bid looks expensive, it made strategic sense for the company as it will help it to increase its market share in the auto- and value-added steel market and give opportunity for further growth.

The acquisition will also put Tata Steel in the forefront among country’s private sector steel firms. Currently, with 18 MTPA capacity, JSW Steel is ahead of Tata Steel, with which has 13 MTPA capacity. The acquisition of Bhushan Steel itself will make the company the largest private-sector steel maker in the country.

Bhushan Steel’s primary steel plant is located in iron ore-rich Odisha. Though the firm does not have captive iron ore, it has downstream processing facilities in northern and western India, closer to the key consumption hubs in autos and white goods and also close to ports. The company reported a net loss of Rs 3,614.8 crore in FY17 on revenues of Rs 15,027 crore.

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